Second half should be good: Pawan Munjal

Interview with Chief executive & managing director, Hero MotoCorp

In its first foreign acquisition after termination of the joint venture with Honda, Hero MotoCorp picked up a 49.2 per cent stake in Erik Buell Racing (EBR) last week. Managing director and CEO Pawan Munjal tells Sharmistha Mukherjee how the partnership will help Hero expand in North America and Europe. Excerpts:

Hero witnessed slow sales in FY13, while Honda gained volumes by launching models rapidly. When do we see the next set of products from Hero? When do you expect the market to recover?
The market has been sluggish for some time. Only the sales of scooters and motorcycles in the 125cc segment have increased. Our competition has had a regular flow of new models. Because we switched and re-started, we needed time. Starting this Diwali season, you should see new products from Hero. New products will start from 2014. The number of new launches would increase.  In May, retail sales of Hero were brilliant. We don’t expect much growth in the first half of this financial year but the second half should be good. The industry is expected to grow by six to eight per cent. We should do better.

What are your expansion plans through your new partnership with EBR?

We are extending our relation with EBR. Operationally, it would be business as usual and Erik Buell will continue as chairman and CEO. But now we would not just buy technology but be strategically involved in the board of the company. We will be selling and marketing EBR and Hero brands in international and domestic markets. EBR already has a network in the US and is developing a distribution setup in Europe. We will sit down and decide on the branding. Some of our current products can be sold in North America. We can definitely bring EBR products to India but no timeframe has been finalised yet.

The US is traditionally known for high-end bikes. Is there potential for motorcycles with smaller engines there?
Yes, we definitely see a scope for our bikes in the US, which is why we have bought a stake in EBR. We wanted to be involved strategically in the company, which is really helping us take our products forward in terms of design and technology. Additionally, there is tremendous scope for selling some of our products, not the whole range, in some niche markets in the US.

With a strategic tie-up with EBR, is there an opportunity for Hero to assemble bikes in the US at your partner’s manufacturing unit?

Manufacturing locally would depend on a lot of factors such as volumes and production costs. We have to see if it makes sense. We might look at assembling products in Colombia for the US markets.

Would you look at investing in your other alliance partners — Engines Engineering and AVL?
There is so much stuff happening. I go quite often (to Europe). I am very happy with what I see. Inorganic growth is now a way of life at Hero, so I am constantly travelling and looking for new opportunities and the right partners. The pace of acquisition would depend on what we find,  when and where.

Workers at Bajaj Auto's Chakan plant recently asked for company shares at a discount. What is your view on the subject?
I totally agree and sympathise with Mr Bajaj in the issue.